CDC Software Corporation (NASDAQ: CDCS), a global provider of
enterprise software applications and services, today announced
that, based on preliminary financial projections and estimates, the
company expects third quarter 2009 GAAP net income to be in the
range of (U.S.)$5.8 million to (U.S.)$6.4 million and Adjusted
EBITDA (a) to be in the range of (U.S.)$12.9 million to (U.S.)$13.5
million, exceeding Wall Street estimates for the quarter.
First Call consensus estimates for CDC Software’s third quarter
of 2009 are (U.S.)$4.6 million for GAAP net income and (U.S.)$11.5
million for Adjusted EBITDA. Third quarter non-GAAP net income per
share (a) is expected to be in the range of (U.S.)$0.32 to
(U.S.)$0.34 cents per share. This exceeds the First Call consensus
estimate of (U.S.)$0.27 per share for non-GAAP net income per
share. CDC Software expects third quarter 2009 revenue to be in the
range of (U.S.)$48.3 million to (U.S.)$48.9 million, which is in
line with First Call consensus estimates.
“We are pleased that, according to our preliminary
estimates, we expect to exceed Wall Street consensus for Non-GAAP
net income per share by 22 percent,” said Peter Yip, CEO of CDC
Software. “Third quarter GAAP net income and Adjusted EBITDA are
expected to exceed analyst consensus by 33 percent and 15 percent,
respectively. Third quarter EBITDA margin is expected to increase
to 27 percent compared to 22 percent in the same period last year.
It is also important to note that since CDC Software went public in
August, this is the second consecutive quarter we have beaten our
internal quarterly expectations, which we believe were the most
appropriate measurements for us at the time since analyst coverage
of CDC Software did not start until the third quarter, which in
itself exceeded analyst expectations. As for the current quarter,
our fourth quarter sales pipeline has continued to increase and has
shown steady growth over the last four quarters. In addition, our
cross-sell opportunities in the fourth quarter have continued to
increase along with the growth in our sales pipeline. We also are
seeing organic sales growth and expect license revenue from new
logo customers to double in the third quarter of 2009 compared to
the second quarter of 2009. We have already closed several
significant deals in food and beverage and the financial services
industries in the fourth quarter.”
Yip added, “Despite the global recession and subsequent slow
recovery, we believe we are well positioned to continue improving
our business fundamentals and key operational metrics. Finally,
with improving operating metrics and increasing net cash on
hand estimated to be approximately $60 million at the end of
the third quarter, we are poised to continue our growth through
organic and cross-sell sales opportunities, as well as synergistic
acquisitions in both the on-premise as well as Software as a
Service (SaaS) models.”
CDC Software Unaudited Reconciliation From
GAAP Results to Adjusted EBITDA and Adjusted Net Income Based on
the Mid Point of the Range (Amounts in thousands of U.S.
dollars except share and per share data) Three months
ended September 30, 2009 (a) Reconciliation
from GAAP results to Adjusted EBITDA from continuing operations
Operating income from continuing operations $ 7,189 Add back
restructuring and other charges 900 Add back depreciation expense
766 Add back amortization expense 1,094 Add back amortization
expense included in cost of revenue 3,388 Add back stock
compensation expenses 750 Add back exchange gain on deferred taxes
(865 ) Adjusted EBITDA $ 13,222 Adjusted EBITDA
margin % 27 % (1) Adjusted EBITDA does not include the
adjustment related to capitalized software costs which are credited
against research and development expenses in our consolidated
statement of operations. Below is a summary of capitalized software
credits for the three months ended September 30, 2009:
Three months ended September 30, 2009
Capitalized software credits $ (905 )
Three
months ended September 30, 2009 (a)
Reconciliation from GAAP Net Income to Adjusted Net Income and
Adjusted Net Income per Share Net income attributable to
controlling interest $ 6,242 Add back amortization expense 1,094
Add back amortization expense included in cost of revenue 3,388
Subtract capitalized software credits (905 ) Add back stock based
compensation 750 Add back restructuring 900 Add back exchange gain
loss on deferred tax assets (865 ) Add back non cash tax expense
642 Tax affect on all reconciling items@31% (1,620 )
Adjusted net income $ 9,626 Adjusted net income as % of
revenues 20 %
Weighted average shares
outstanding (basic and dilutive)
28,999,740
Adjusted net income per share
(basic and dilutive)
$ 0.33
(a) Adjusted Financial Measures
This press release includes Adjusted EBITDA and non-GAAP net
income per share, which are not prepared in accordance with GAAP
(collectively, the "Non-GAAP Financial Measures"). Non-GAAP
Financial Measures are not alternatives for measures such as
EBITDA, net income, and earnings per share prepared under generally
accepted accounting principles in the United States ("GAAP"). These
Non-GAAP Financial measures may also be different from non-GAAP
measures used by other companies. Non-GAAP Financial Measures
should not be used as a substitute for, or considered superior to,
measures of financial performance prepared in accordance with
GAAP.
Investors should be aware that these Non-GAAP Financial Measures
have inherent limitations, including their variance from certain of
the financial measurement principals underlying GAAP, should not be
considered as a replacement for GAAP performance measures, and
should be read in conjunction with our consolidated financial
statements prepared in accordance with GAAP. These supplemental
Non-GAAP Financial Measures should not be construed as an inference
that the Company's future results will be unaffected by similar
adjustments to net earnings determined in accordance with GAAP.
Reconciliations of Non-GAAP Financial Measures to GAAP are provided
in this press release.
* Special Note Regarding CDC Software Preliminary Financial
Results
The preliminary financial results provided herein apply only to
CDC Software Corporation, a subsidiary of CDC Corporation. These
preliminary financial results do not apply to, and are not
indicative of, the consolidated financial results of CDC
Corporation, or the financial results of CDC Games Corporation,
China.com, Inc. or any of their respective subsidiaries. Investors
are cautioned not to place reliance on the preliminary financial
results set forth herein for purposes of any investment decision
with respect to the shares of CDC Corporation, and should read the
foregoing in conjunction with the reports and other materials filed
with the United States Securities and Exchange Commission by CDC
Corporation and CDC Software Corporation, from time to time.
About CDC
Software
CDC Software (NASDAQ: CDCS), The Customer-Driven Company™, is a
provider of enterprise software applications and services designed
to help organizations deliver a superior customer experience while
increasing efficiencies and profitability. CDC Software's product
suite includes: CDC Factory (manufacturing operations management),
CDC Ross ERP (enterprise resource planning), CDC Supply Chain
(supply chain management , warehouse management and order
management),CDC X-alert (real-time event management), e-M-POWER
(discrete manufacturing), CDC Pivotal CRM and Saratoga CRM
(customer relationship management), CDC Respond (customer complaint
and feedback management), c360 CRM add-on products, industry
solutions and development tools for the Microsoft Dynamics CRM
platform, CDC HRM (human resources) and business analytics
solutions.
These industry-specific solutions are used by more than 6,000
customers worldwide within the manufacturing, financial services,
health care, home building, real estate, wholesale and retail
distribution industries. The company completes its offerings with a
full continuum of services that span the life cycle of technology
and software applications, including implementation, project
consulting, technical support and IT consulting. For more
information, please visit www.cdcsoftware.com.
About CDC Corporation
The CDC family of companies includes CDC Software (NASDAQ: CDCS)
focused on enterprise software applications and services, CDC
Global Services focused on IT consulting services, outsourced
application development and IT staffing, CDC Games focused on
online games, and China.com China.com, Inc. (HKGEM:8006) focused on
portals for the greater China markets. For more information about
CDC Corporation (NASDAQ: CHINA), please visit
www.cdccorporation.net.
Cautionary Note Regarding Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995. These forward-looking statements include
statements regarding our expectations relating to GAAP net income,
Adjusted EBITDA, non-GAAP net income per share, revenue and our
performance in relation to Wall Street consensus amounts with
respect thereto, our expectations regarding third quarter 2009
EBITDA margin, our beliefs regarding our internal quarterly
expectations, our beliefs regarding our sales pipeline and
cross-selling opportunities, our expectations regarding new logo
license sales in the third quarter of 2009 and our sales pipeline,
our beliefs regarding our future performance, our beliefs regarding
our ability to continue improving our business fundamentals and key
operational metrics, our beliefs regarding our ability to continue
our growth through organic and cross-sell sales, as well as
synergistic acquisitions in both the on-premises model as well
as Software as a Service (SaaS), and other statements that are not
historical fact, the achievement of which involve risks,
uncertainties and assumptions. If any such risks or uncertainties
materialize or if any of the assumptions proves incorrect, our
results could differ materially from the results expressed or
implied by the forward-looking statements we make. These statements
are based on management's current expectations and are subject to
risks and uncertainties and changes in circumstances. There are
important factors that could cause actual results to differ
materially from those anticipated in the forward looking
statements, including the following: (a) the ability to realize
strategic objectives by taking advantage of market opportunities in
targeted geographic markets; (b) the ability to make changes in
business strategy, development plans and product offerings to
respond to the needs of current, new and potential customers,
suppliers and strategic partners; (c) the effects of restructurings
and rationalization of operations; (d) the ability to address
technological changes and developments including the development
and enhancement of products; (e) the entry of new competitors and
their technological advances; (f) the need to develop, integrate
and deploy enterprise software applications to meet customer's
requirements; (g) the possibility of development or deployment
difficulties or delays; (h) the dependence on customer satisfaction
with the company's software products and services; (i) continued
commitment to the deployment of the enterprise software solutions;
(j) risks involved in developing software solutions and integrating
them with third-party software and services; (k) the continued
ability of the company's enterprise software solutions to address
client-specific requirements; (l) demand for and market acceptance
of new and existing enterprise software and services and the
positioning of the company's solutions; (m) the ability of staff to
operate the enterprise software and extract and utilize information
from the company's enterprise software solutions; (n) the continued
cooperation of our strategic and business partners; (o) risks
relating to economic conditions and other matters beyond our
control; and (p) the risk that the preliminary financial results
provided herein could differ from our actual results. Further
information on risks or other factors that could cause results to
differ is detailed in our filings or submissions with the United
States Securities and Exchange Commission, and those of our
ultimate parent company, CDC Corporation, located at www.sec.gov.
All forward-looking statements included in this press release are
based upon information available to management as of the date of
the press release, and you are cautioned not to place undue
reliance on any forward looking statements which speak only as of
the date of this press release. The company assumes no obligation
to update or alter the forward looking statements whether as a
result of new information, future events or otherwise. Historical
results are not indicative of future performance.
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